IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v171y2024ics0304387824001020.html
   My bibliography  Save this article

Trade liberalization, labor market power, and misallocation across firms: Evidence from China's WTO accession

Author

Listed:
  • Xie, Enze
  • Xu, Mingzhi
  • Yu, Miaojie

Abstract

This paper studies the impact of trade liberalization on the heterogeneity of labor market power among manufacturing firms, which is a potential source of misallocation. The model shows that heterogeneity of labor market power distorts the allocation of the factors of production, and the variance in the natural log of the markdown serves as a sufficient statistic to infer its negative impact on overall production efficiency. Using China's accession to the World Trade Organization (WTO) as a natural experiment, the empirical results suggest that lower input tariffs decrease the variance in the natural log of the markdown, which reflects the improvement in misallocation. In contrast, reductions in output tariffs have no significant effects.

Suggested Citation

  • Xie, Enze & Xu, Mingzhi & Yu, Miaojie, 2024. "Trade liberalization, labor market power, and misallocation across firms: Evidence from China's WTO accession," Journal of Development Economics, Elsevier, vol. 171(C).
    • Handle: RePEc:eee:deveco:v:171:y:2024:i:c:s0304387824001020
    DOI: 10.1016/j.jdeveco.2024.103353
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304387824001020
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jdeveco.2024.103353?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Heterogeneous monopsony power; Misallocation; Trade liberalization; Markdown distribution;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:171:y:2024:i:c:s0304387824001020. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.